Entering 2020, there was plenty of chatter about the outlook for European equities and the related ETFs due to expectations that the region could finally catch up to the performance of U.S. stocks and its status as a value destination.
Cost-conscious investors looking to tap those themes should consider the SPDR Portfolio Europe ETF (NYSEARCA: SPEU). SPEU tracks the STOXX Europe Total Market Index and charges just 0.09% per year, or $9 on a $10,000 investment.
As ETF investors seek international exposure to diversify their equity portfolio and potentially tap into more attractive plays abroad, traders should consider currency-hedged strategies that allow investors to capture upside potential in the global markets while hedging against potentially weakening international currencies or a stronger U.S. dollar.
SPEU “is a hidden gem among European ETFs, particularly for cost-conscious investors. In nearly all cases, investors can expect higher fees when it comes to international ETFs, but SPEU softens that blow as it’s one of the least expensive funds in its category,” reports InvestorPlace.
Spying on SPEU
According to the Global Funds 2020 Positioning Themes report compiled by Copley Fund Research, global fund managers now have the biggest overweight position in European stocks on record while including the least amount of exposure to emerging markets in six years relative to the benchmark.
Specifically, Copley found that the overweight to developed European stock markets touched a new high of 8.83% at the start of 2020. All major European countries and sectors showed an overweight positioning, led by the U.K., Germany, and Switzerland.
“Overall, nearly 20 countries are represented in the cost-effective SPEU. The United Kingdom, France and Switzerland combine for 56% of the fund’s weight. Including those markets, the bulk of SPEU’s geographic exposure trades at valuation discounts to comparable domestic benchmarks,” according to InvestorPlace.
As investors position their portfolios for the year ahead, many may be focusing on European markets and region-related ETFs to capture new opportunities for growth.
“SPEU’s more than 1,400 holdings are well diversified among cyclical and defensive sectors. Financial and industrial stocks combine for almost a third of the fund’s roster. Lower-beta healthcare and consumer staples names combine for over a quarter,” reports InvestorPlace.
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The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.